For a book so littered with wisdom, one particularly stood out. The book is Rework, and the nugget here is ‘Hire the better writer’.

They say:

“If you are trying to decide among a few people to fill a position, hire the best writer. It doesn’t matter if that person is a marketer, salesperson, designer, programmer, or whatever; their writing skills will pay off.

That’s because being a good writer is about more than writing. Clear writing is a sign of clear thinking. Great writers know how to communicate. They make things easy to understand. They can put themselves in someone else’s shoes. They know what to omit. And those are qualities you want in any candidate.”

We value face to face communications and colocated teams a lot, particularly in software development. But still writing skill is important. Because, as said, it reflects the ability to empathize, to be clear, and to be effective. I do not know of any effort that measured the hidden cost of bad writing. It can be enormous.

Tom Peter says here on his Brand You message on Writing:

“But I do guarantee you—at least I suppose if you’re over age 26 or 27—that the quality of written communication is still incredibly important. And most of our executives, or many of our executives, are in their 40s or their 50s, so it’s particularly important if one is communicating with people like that”.

And then:

“…Work on your writing. I believe—and you’ll never convince me otherwise—it is a timeless and powerful skill.“

And where to look for good writing? There’s many. Style guides like ‘Elements of Style”, Chicago Manual of Style, or Economist’s. I find valuable William Zinsser’s On Writing Well, Ray Bradbury’s Zen in the Art of Writing, and Stephen King’s On Writing.  Eat, Shoot & Leaves will make you laugh and learn about punctuations.

V.S.Naipaul, in Economist’s Intelligent Life (Autumn issue, 2010), lays down seven rules of writing for beginners. (1) write sentences no more than 10 to 12 words; (2) make each sentence a clear statement (a series of clear linked statements makes a paragraph); (3) use short words – average no more than five letters; (4) never use a word you don’t know the meaning of; (5) avoid adjectives except for ones of colour, size and number; (6) use concrete words, avoid abstract ones; (7) practice these rules everyday for six months.

And, of course, this post is for me. As much as for anyone else.

“For a variety of reasons, measuring doctor skill is a tricky affair” so argues Steven Levitt and Stephen Dubner about rating doctors, in their “Superfreakonomics“. That’s because – first there is selection bias, sicker patients seek out better doctors and no matter how good the doctor is, their high risk makes them more vulnerable. Then, the doctor, knowing that he is measured against patient outcomes, is more likely to “cream-skim” the patients and turning down high-risk patients. That’s not what was intended.

Levitt and Dubner say “…the law of unintended consequences is among the most potent laws in existence“. Disabilities Act, meant to prevent discrimination of disabled, in fact results in fewer people with disabilities getting hired as employers worry they cannot discipline or fire them. Endangered Species Act, supposed to protect endangered species and their habitats, actually makes landowners cut down trees to make their land less attractive to endangered species, lest their land is claimed by the government.

Public policies, economics, law abound with such examples. Organizations too.

It’s stale but still worth repeating the Dilbert strip with Wally’s “I gonna write me a new minivan this afternoon” in response to PHB’s decision that engineers will be paid on how many bugs they fix. People behave the way they are going to get measured by.

Someone, the other day, was trying to measure agility of teams practising Scrum within an organization. I cannot blame if that makes teams trying to game the system. Then there was that ‘programmers productivity’. A muddy subject, if not useless. In any case, why bother? And don’t get me started on Lines of Code. I have seen managers trying to rewards developers with pens for writing unit tests for their own code. I have seen people shying away from mentoring others if individual performance is all they are measured against. And it gets worse if it’s all a zero-sum game.

Do we really need to measure everything? Robert Glass, in Facts and Fallacies of Software Engineering, cites their Fallacy 1 as: You can’t manage what you can’t measure. However, he argues, we do manage things we cannot measure – think of software design, think of cancer research. Edward Deming includes in his 14 points: “Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership“.

This is not to undermine the value of data and its analysis. It’s to recognize that there will be nooks and corners where data, at least the obvious ones, will mislead more than show. Then how do we get around managing those dark corners? Gut factor. Or Gladwellian blink factor. Or flip a coin.

Dr. Eric Bonabeau and Christopher Meyer say “Social insects work without supervision. In fact, their teamwork is largely self-organized, and coordination arises from the different interactions among individuals in the colony. ..The collective behavior that emerges from a group of social insects has been dubbed “swarm intelligence”.

And then they add: ” In essence, we believe social insects have been so successful..because of three characteristics: flexibility, robustness and self-organization…In fact, the major recurring theme in swarm intelligence is that even if individuals follow simple rules, the resulting group behavior can be surprisingly complex and remarkably effective. And, to a large extent, flexibility and robustness result from self-organization”. The authors write how Jim Donehey, the CIO of Capital One, consulted the authors when he wanted the growing IT department to break free from command-and-control model (which, among other questionable things, don’t scale) and assimilate new employees in the organization. Donehey became intrigued with the way social insects can perform tasks efficiently using just a few fundamental rules. Donehey crafted four rules, put them in practice and got it ingrained. A year later Capital One’s IT department had an attrition rate of 4% when IT industry’s average was 20%.

Dr. Thomas.D.Seeley, professor at Cornell University, makes the case with honeybees in his acclaimed book ‘The Honeybee Democracy‘. Dr. Seeley dispels the common misunderstanding right at the outset that the colony is governed by a benevolent dictator – the queen mother. The work of the hive is indeed governed by the workers themselves who share a common goal. Through a network of shared information and cues, they achieve what Dr. Seeley calls an ‘enviable harmony of labor without supervision’. When it comes to hunting a house in spring or early summer, a group of about ten thousand bees make a collective and democratic decision using a repertoire of waggle dances, and invariably lands up in the best site for house. He writes: “…inside each teeming beehive is an exemplar of a community whose members succeed in working together to achieve shared goals… these little six-legged beauties have something to teach us about building smoothly functioning groups, especially ones capable of exploiting fully the power of democratic decision making.”

Dr. Seeley compares a honeybee swarm to neurons in human brain (1.5 kilos of honeybee to 1.5 kilos of neurons) and shows how both achieve their collective wisdom by organizing themselves in such a way that even though each individual has limited information and limited intelligence, the group as a whole makes first-rate collective decisions. It seems that decision-making process is essentially a competition between alternatives to accumulate support (e.g., neuron firings and bee visits), and the alternative that is chosen is the one whose accumulation of support first surpasses a critical threshold. And consistencies like these suggest that there are general principles of organization for building groups far smarter than the smartest individuals in them, and collectively picking the best decision towards the common goal.

Dr. Seeley posits: My analyses of collective decision-making by honey bee colonies indicate that a group will possess a high level of SI (swarm intelligence) if among the group’s members there is:

• diversity of knowledge about the available options,
• open and honest sharing of information about the options,
• independence in the members’ evaluations of the options,
• unbiased aggregation of the members’ opinions on the options, and
• leadership that fosters but does not dominate the discussion.

Such findings can go a long way in helping organizations accomplish one of the most challenging and critical thing – building self-organized teams.

Peter Miller begins his The Smart Swarm with (again!) Southwest Airlines wrestling with a question if they need to abandon its long-standing policy of open seating in planes. Eventually Southwest found the answer by using virtual ants to find the best way to board a plane. When talking about the coordinated behavior of a flock of starlings, Peter Miller explains the key that adaptive mimicking along with self-organization, diversity of knowledge, and indirect collaboration, is the fourth principle of a smart swarm. The Smart Swarm covers ants, bees, termites, birds, locusts and wonders what can our organizations learn from their way of collaboration.

Getting teams self-organized might be a utopian concept for organizations trying to be agile, or implementing agile/Scrum way of software development. This is particularly challenging to hierarchical organizations with long history of command and control. And talking about self organized teams, it’s a thin line separating harmony and chaos. So better, as some say, to be self-directed. In any case, it will go a long way for human organizations to understand what the insects and birds know about self-organization that we don’t.

Change in an organization can be categorized, in one of the ways, from its breadth of impact. A change of software development from traditional (waterfall) to agile (say, Scrum) is a radical change. For a software organization, it touches not only engineering or development, but also sales, marketing, finance, even HR. The same is for Lean transformation from batch mode. A crucial element change leaders often ignore or underestimate is psychology.

Studies after studies in heath care tell us that 90% percent of the people who belong in high risk group like who have undergone coronary-artery bypass surgery do not change their lifestyle. In the words of Dr. Edward Miller, the dean of the medical school and CEO of the hospital at Johns Hopkins University..”…Even though they know they have a very bad disease and they know they should change their lifestyle, for whatever reason, they can’t…“.

The same article goes onto reflect the view of John Kotter: “Changing the behavior of people isn’t just the biggest challenge in health care. It’s the most important challenge for businesses trying to compete in a turbulent world, says John Kotter, a Harvard Business School professor who has studied dozens of organizations in the midst of upheaval: “The central issue is never strategy, structure, culture, or systems…. And as individuals, we may want to change our own styles of work — how we mentor subordinates, for example, or how we react to criticism. Yet more often than not, we can’t.“

Having seen through a fair share of lean and agile transitions, I can relate. The predominant emotions to be dealt with are fear, confusion, ego, greed (of power). In many organizations, years of traditional/waterfall with phase gate approach, command-and-control has defined a whole different culture, even provided a platform of survival to many. For them, it is now too important to let go.

I recall of an IT organization, global and big in all respects, for which the biggest chunks of revenue lay in client accounts using traditional way of running projects. Agile for it was more of a sales gimmick. They go agile only when clients insist on it. More than agile it’s a facade of agile: a series of short waterfalls. Obviously, people working in such projects suffered conflicts wondering what really the beast called agile is.

The same Fast Company article goes on: Unfortunately, that kind of emotional persuasion isn’t taught in business schools, and it doesn’t come naturally to the technocrats who run things — … who pride themselves on disciplined, analytical thinking. There’s compelling science behind the psychology of change — it draws on discoveries from emerging fields such as cognitive science, linguistics, and neuroscience — but its insights and techniques often seem paradoxical or irrational.

Dr. Dean Ornish, a professor of medicine at the University of California at San Francisco and founder of the Preventative Medicine Research Institute, in Sausalito, California, could bring the change where John Hopkins and Global Medical Forum couldn’t. Ornish helped 333 seemingly incorrigible patients quit smoking, follow diet, exercise; 77% of whom stuck with the lifestyle changes after 3 years.

Why does the Ornish program succeed while the conventional approach has failed? For starters, Ornish recasts the reasons for change. Doctors had been trying to motivate patients mainly with the fear of death, he says, and that simply wasn’t working. For a few weeks after a heart attack, patients were scared enough to do whatever their doctors said. But death was just too frightening to think about, so their denial would return, and they’d go back to their old ways.

So instead of trying to motivate them with the “fear of dying,” Ornish reframes the issue. He inspires a new vision of the “joy of living” — convincing them they can feel better, not just live longer….

“Joy is a more powerful motivator than fear ” he says.

A McKinsey article ”The Psychology of Change Management” prescribes four conditions for changing mindsets: a purpose to believe in, reinforcement systems, skills required, and consistent roles models. And this S&B article tells us “Change is, at its core, a people process, and people are creatures of habit, hardwired to resist adopting new mind-sets, practices, and behaviors” and suggests “Build an emotional and rational case for change” as one of the key success factors.

Chip Heath, who along with his brother Dan Heath authored Switch, shows how managers can catalyze change more effectively by drawing on an enormous body of research from psychologists on how the brain works .In this interview with McKinsey Quaterly, Chip Heath posits : Pay attention to creating an emotional case for change, not just an analytical one.

Linda Rising and Mary Lynn Manns, in their excellent “Fearless Change: Patterns for Introducing New Ideas” says:  ”I think the most important message behind the patterns is that we are not logical decision-makers. We act based on emotion, primarily fear. Most of us are afraid of change, even if it seems exciting. As a result, you need to appeal to emotion and relieve the fear.”

I have seen, unfortunately, a few organizations that couldn’t overcome the fear and couldn’t sustain the change; and then fell back upon old traditional way of building software. For high risk heart patients who are given the option to change or die, the odds are nine to one that people really changed themselves.

Like a Russian prime minister, Viktor Chernomyrdin, once said “Whatever organisation we try to create, it always ends up looking like the Communist Party.”

The infoq posit on “Command and control military gets Agile” talks about how “The military is suddenly taking Agility (big “A”) very seriously”.  It points to a fine resource of Department of Defense Command and Control research program DoD C2 (C2 stands for Command and Control) and a precis on Agility Imperative.

That seemed, at least to me, contradictory. I understood ‘command and control’ very much the same way as Joel Spolsky once wrote - “Primarily, the idea is that people do what you tell them to do, and if they don’t, you yell at them until they do…“. No room for questions, opinions, thoughts, big picture, context. Just blind subservience. Agree though that my learning of military comes from rented DVDs of war movies.

That led me to question : ‘What exactly is this ‘command and control’?

I was in luck as this very site has a 255 page paper – ‘Understanding command and control‘.

And sure it seems to have a different meaning of command and control. (The paper even uses a special font for the word ‘command and control’ to stress the difference). Few extracts are like this:

- Command and Control determines the bounds within which behavior(s) are to take place, not the specific behaviors themselves. The degrees of freedom associated with these bounds can vary greatly.
- It is important to always keep in mind that there are many different approaches to accomplishing these functions. No specific approach or set of approaches defines what Command and Control means.

And then:
- Successfully accomplishing the functions of Command and Control does not necessarily require: • Hierarchical organizations • Explicit control

It goes on to say:
While the determination of intent and its communication to mission participants are traditionally thought of as responsibilities of the one who is in charge or in command, this does not have to be the case…There are numerous instances where there is no supreme or higher authority that can, in practice, determine intent. What is important is that the behaviors of the entities involved (individuals, organizations, and systems) act as if they are working toward some common purpose. Thus, intent may or may not be (1) explicitly communicated, (2) consciously or formally accepted, or (3) widely shared.

I understand that in this command and control – you don’t bark orders (I need to return those DVDs) but draw boundaries within which you are free to choose your behavior towards the best interest of the group or organization. The boundaries can come from framework (think Scrum), roadmap, goals , vision and/or culture.

Another paper “Agility, Focus, and Convergence: The Future of Command and Control” focuses on the need to change the term command and control as it is liable to convey a wrong message. The authors say : Focus & Convergence is the term that I have chosen to replace Command and Control.

In old view, it’s the control part usually being held for the stigma.

There are enough evidences in behavioral science on how control affects behavior and is linked to, say, performance or even life span. A group with a control button to reduce ambient noise performs much better without the control button; it doesn’t matter if the first group never used the button (I can’t remember the source. Dan Ariely?). It is the sense of control rather than usage of control that makes them perform better.

Leonard Mlodinow writes in his ‘The Drunkard’s Walk’ about control:
“Our desire to control events is not without purpose, for a sense of personal control is integral to our self-concept and sense of self-esteem.”

Further down the pages, Mlodinow tells how psychologist Ellen Langer, one of pioneers of psychology of control, studied the effect of the feeling of control on elderly nursing home patients. One group was given control on their room arrangement and which plants to care. Other was not. Eighteen months later a follow-up study shocked researchers: the group that was not given control experienced a death rate of 30 percent, whereas the group that was given control experienced a death rate of only 15 percent.

Still many business houses and management functions considers Control, even to the lowest level, as an essential form of management.

Mr Junger is more interested in the war as it is experienced by the American soldiers, mostly white 20-somethings, with whom he eats, sleeps and very often nearly gets killed… He is in awe of his fellows’ fighting skills and mostly good-tempered acceptance of, indeed sometimes relish for, appalling danger. This leads him to a broader inquiry into why this is generally true of modern soldiers.

The main reason, Mr Junger observes and numerous studies have confirmed, is love. The Americans in the Korengal, heroes by the standards of any warrior culture, are not especially religious or patriotic. They show little interest in the war overall or allegiance to the army at large; indeed, they cheer other units’ misfortunes. Rather, with passionate intensity, they fight for each other. “What the Army sociologists, with their clipboards and their questions and their endless meta-analyses slowly came to understand was that courage was love,” Mr Junger writes. “In war, neither could exist without the other.”

Tom Peters too have a word on this ” It’s all about the relationships, duh“?

It will be interesting to know how team of soldiers arrive at this point. Do such a team also goes through stages of, say, Tuckman’s model?

That’s what Joshua Green talks about in his article in The Atlantic. It seems Grateful Dead’s strategies and practices are influencing, of all people, managers and business students. He writes, “Without intending to-while intending, in fact, to do just the opposite-the band pioneered ideas and practices that were subsequently embraced by corporate America.”

Deadheads, the famous peripatetic (no, not pathetic) fans, followed, literally, the touring band. Though loose in the sense that they came from different parts of the country, there was a deep bond among them. Tribes , in fact.  Grateful Dead knew what it meant to care and connect with their vital fans. “The Dead were masters of creating and delivering superior customer value,” Barry Barnes, a business professor from Florida posits. And that was before American companies had to learn that from Japanese.

Grateful Dead also let Deadheads record songs freely in concerts. Band’s lyricist, John Perry Barlow explains to the author “..if I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced...”. None can argue with that now. “Strategic improvisation” is the word coined by Prof. Barry Barnes. May not be the pioneer, but sure an harbinger of open source philosophy.

Prof. Barnes then theorizes, “Giving something away and earning money on the periphery is the same idea proffered by Wired editor Chris Anderson in his recent best-selling book, Free: The Future of a Radical Price.”

Chris Anderson, in his Wired article on Free (there’s a book too), starts with Gillette as revolutionizing business models with offering throwaway models. It’s possible since it comes at throwaway price. However ‘throwaway’ disposable razors are, they are not free. And the difference between “free” and “not-free”, however little it might be, is a major difference.

Giving it all away might not always be that altruistic. Joel Spolsky, in his blog once wrote, “I noticed something interesting about open source software, which is this: most of the companies spending big money to develop open source software are doing it because it’s a good business strategy for them, not because they suddenly stopped believing in capitalism and fell in love with freedom-as-in-speech.” (There, I believe, are open source softwares with its origins in idealism which later got monetized by bigger companies. Then again, do ‘money’ and ‘altruism’ need to conflict?)

Coming to innovative pricing, perhaps Rainbows takes the cake. Todd Sattersten, in his “A Pricing Utopia” says “..You can’t please all of the people all of the time, when it comes to price, no matter what you charge, you are going to leave money on the table. Some customers will pass because the cost is too high, while others would have paid more…..”.

In October 1, 2007, Radiohead released their album on their own website as both digital download and $80 premium discbox that included two CDs, two vinyl records, photos and lyric book. In Rainbows has become more well-known for the sales method than the music itself. So Radiohead vaporized their middleman (recording company) who were eating into the profits and watering down art. Thom Yorke told TIME , “...but the time is at hand when you have to ask why anyone needs one...”. (Where is the manager of the self-managed team?)

Towards the end of the article, Joshua Green writes “That was the value proposition with the Dead.” The Dead thrived for decades, in good times and bad. In a recession, Barnes says, strategic improvisation is more important than ever. “If you’re going to survive this economic downturn, you better be able to turn on a dime,” he says. “The Dead were exemplars.” It can be only a matter of time until Management Secrets of the Grateful Dead or some similar title is flying off the shelves of airport bookstores everywhere.

Now, at least, there is a blog.

When ALM solutions try to oversell, a simple good whiteboard can do the job. And better. Even if you ignore the team jellyness it brings as well as all the benefits of visual boards. (Not to say ALM or project management solutions don’t have a place, but yes, they don’t always have a place).

Kevin Mayer, on his excellent post, points out how a run to staples (to get sticky notes) can do a better job than any expensive software solution. The obvious message is to restrain yourself.

Agile manifesto principles says “Simplicity–the art of maximizing the amount of work not done–is essential”. Rings with Antoine de Saint-Exupery’s thought on perfection – “… but when there is nothing left to take away”.

Atul Gawande’s ‘The Checklist‘ starts with the byline – “If something so simple can transform intensive care, what else can it do?”.

It tells a story on Boeing bombers:

On October 30, 1935, at Wright Air Field in Dayton, Ohio, the U.S. Army Air Corps held a flight competition for airplane manufacturers vying to build its next-generation long-range bomber….Boeing’s plane could carry five times as many bombs as the Army had requested; it could fly faster than previous bombers, and almost twice as far. A Seattle newspaperman who had glimpsed the plane called it the “flying fortress,” and the name stuck.

But the plane crashed on its first attempt to take off.

An investigation revealed that nothing mechanical had gone wrong. The crash had been due to “pilot error,” the report said. The complexity overwhelmed the pilot.

The Boeing model was deemed, as a newspaper put it, “too much airplane for one man to fly.

Why do we keep the monster machines running?

Sometimes plain lack of intelligence (Howard Gardner’s selective/multiple intelligence) or empathy or aesthetics. Or sometimes to justify our needs. Or fear. Lizard brain. Sometime believing in what we are taught to believe. How can there be simple solution to complex problem?.

(This is not to say all problems can be solved simply. Most problems, I guess, in development economics fall in this category. Einstein’s  “…no simpler...” can be complex enough)

Now with agile way of development gaining more ground, in all flavours – offshored, distributed, CMMised, PMIed, whatever – resistance to any practice can only weaken the whole concept of agile and squeezing the last drop out of it. (Though pair programming is not strictly tied to agile method and one can happily do it in non-agile settings, it gained more mileage piggybacking agile)

One way to counter counterintuitiveness is with empirical studies. Or with studies which explains why it works.

Stuart Ray has come up with such a brilliant article on pair programming which dives into cognitive science to explain how pair programming works. The article delves beautifully in the workings of brain and human behavior, and perhaps corroborates the fact that brain is more a social organ and cannot but feel better with increased chance of social interaction. He goes on to advance four mechanisms of pairing.

One is “Pair programming chat“. It seems talking about programming problems, even to oneself, helps getting unstuck. Stuart Ray goes on to give a wonderful cognitive rationale behind it with language module doing the trick with integrating knowledge held in other modules.

Carruthers suggested that we must rely on the language module posing the right question and that the other modules don’t usually present in­formation spontaneously. However, when we hear the right question, our brains make the nec­essary information available, and the language module can then perform rudimentary inference and draw the obvious conclusions. Carruthers suggested that the key is posing a question that’s “both relevant and fruitful.” The right question draws forth the crucial knowledge, and in a mo­ment of epiphany, the answer becomes obvious.

Next being “Pair programmers notice more details“. In this Stuart Ray talks how more details gets noticed under pair programming. So, two people programming together won’t have the same prior knowledge or categorization: one will presumably spot some things faster and the other different things. That is till pair fatigue sets in.

Then comes “Fighting poor practices“. Pair programming can nudge programmers to follow best practices or rather, to avoid poor practices. In his words, Pair programmers might be less susceptible to poor practices because they can promise to write code in a particular way and ensure that each other’s promises are kept.

And finally, “Sharing and judging expertise”. Programming is one area where you never know how skilled one is unless you get to work together with her. Stuart Ray argues rightly that the individual skill levels become transparent in a team which does peer programming. This argument might also help in managing or rewarding performance of people at individual level.

I tried to find some empirical studies on effectiveness of pair programming. In one study in Norway, 295 programmers were used to do a controlled experiment on pair programming. The results of this experiment do not support the hypotheses that pair programming in general reduces the time required to solve the tasks correctly or increases the proportion of correct solutions. On the other hand, there is 84% increase in effort to perform the tasks correctly. However, on the more complex system, the pair programmers had a 48 percent increase in the proportion of correct solutions but no significant differences in the time taken to solve the tasks correctly. I believe the experiment missed out on a significant factor of pair programming effectiveness increasing with gelled teams and shared context, which is expected in real projects.

In one study to analyze cost and benefit for pair programming, Alistair Cockburn and Laurie Williams, found that for a development-time cost of about 15%, pair programming improves design quality, reduces defects, reduces staffing risk, enhances technical skills, improves team communications and is considered more enjoyable at statistically significant levels. To justify economics, the authors stresses the point that pair/collaborative programming reduces defects by a huge margin even if there is small increase in development effort, which in the end compares favorably cost-wise towards pair programming.

It will only help to consider such studies (or better trying it out) before ditching pair programming just because it happened to be counterintuitive to conventional wisdom. It will be a shame if in a rush to get agile branded shops cherry pick agile practices instead on building a foundation of right culture. It might help in sales gimmicks but not in greater good of agile.

One can hardly help the feeling that we are directed towards a false dichotomy. It doesn’t have to be such. Intrinsic and extrinsic motivation are not mutually exclusive, and perhaps the need is to seek a balance or a holistic treatment taking the context in consideration. This is the very least to be expected from an author of a book on right brain thinking. The importance of context seems to be missing.

Schumpeter argues that for most of jobs being outsourced and automated, primary motivation need to be of intrinsic variety. (As if the people where the job is being outsourced to are too dumb or too cheap to need any intrinsic motivation). But people don’t always rely on their employer to unleash their creativity. There are millions who paint, write, make movies, form great organizations, champion causes, once their paying-the-bills-day-job is over. I saw a group of very passionate people holding onto their mundane jobs create and take to great heights a fine cinema club. Little wonder Hugh MacLeod had to suggest ‘Keep your day job‘. The losers here, hardly unsurprising, are the organizations.

In any case, it is next to impossible for anyone to imagine in separate context money and organization (at least in capitalism). Maybe that’s why not-for-profit and open source has involvement without monetary expectations, because the context itself is non-monetary, with organization not dying for the last dollar. Schumpeter also mentions “Paying people to give blood actually reduces the number who are willing to do so“. Because by linking it to money, market norms encroach on social norms; and expectations were different in both cases. Dan Ariely captures this well in his Predictably Irrational.

McKinsey Quarterly carried on with the suggestion that current recession gives the organization a good chance to move from financial to non-financial (intrinsic) opportunities. Money is scarce, employee morale seeing a new nadir everyday, yet the need for retaining and attracting talent is as crucial as ever. So, no better time than now to make the change.

McKinsey then asks: Why haven’t many organizations made more use of cost-effective nonfinancial motivators at a time when cash is hard to find?
It seems:

One reason may be that many executives hesitate to challenge the traditional managerial wisdom: money is what really counts. While executives themselves may be equally influenced by other things, they still think that bonuses are the dominant incentive for most people. “Managers see motivation in terms of the size of the compensation,” explained an HR director from the financial-services industry.

Another reason is probably that nonfinancial ways to motivate people do, on the whole, require more time and commitment from senior managers. One HR director we interviewed spoke of their tendency to “hide” in their offices-primarily reflecting uncertainty about the current situation and outlook. This lack of interaction between managers and their people creates a highly damaging void that saps employee engagement.

But there’s another dimension. And that’s money is not just about only money. It’s a lot more things.

In September 2003, Richard Grasso, who was then the head of the New York Stock Exchange, became the first CEO in American history to get fired for making too much money.

To explain, James Surowiecki in his brilliant ‘The Wisdom of Crowds‘ writes:

‘ The explanation for people’s behavior might have something to do with an experiment called the “ultimatum game,” which is perhaps the most well-known experiment in behavioral economics. The rules of the game are simple. The experimenter pairs two people with each other. (They can communicate with each other, but other they are anonymous to each other.) They’re given $10 to divide between them, according to this rule: One person (the proposer decides), on his own, what the split should be (fifty-fifty, seventy-thirty, or whatever). He then makes a take it or leave it offer to the other person (the responder). The responder can either accept the offer, in which case both players pocket their respective shares of the cash, or reject it, in which case both players walk away empty-handed.”

It seems it’s rational for proposer to make a lowball offer and the responder, left with no choice, to accept it. Whatever it is, responder is left with no money if he doesn’t accept it, which is worse than accepting a ridiculously lowball offer. In practice, though, this rarely happens. Responder, in most cases, rejects it.

This experiment is repeated across countries; with million dollar; with capuchin monkeys. The results are the same.

Because, money is an indicator of fairness, and humans and capuchin seem to care whether rewards are fair. It means people think it is very important that they (and everyone else) get what is deserved. People not only compare rewards within organization but also within society. We are all too familiar with banker bonuses and Wall Street packages. Also, we are not very unfamiliar to see in some cases the very executives championing intrinsic rewards eyeing fatter pay packages. Money being one of the few tangible things as far as rewards go, people are very likely to root for more money in such cases. If not anything else, it gives them the sense of being fairly treated.

Dilbert has a telling strip where Dilbert, Alice and Wally present a wrapped gift box to PHB pooling their bonus money, which on unwrapping appears to be empty. Dilbert and all say “Better luck next time”.